Stitch Fix, Inc. Q4 FY2025 earnings call

• Transformation strategy: Relentlessly executing to be client-centric and personalized, reshaping operations and client experience. Q4 had 4.4% adjusted revenue growth, exceeding guidance, and second consecutive quarter of revenue growth. Gained market share in U.S. apparel market. Adjusted EBITDA was $8.7 million or 2.8% of revenue, ahead of guidance.
• Client experience improvements: Fix average order value grew 12% Y/Y due to higher items per Fix and fixed AUR up 7.6%. New features like building Fix around freestyle item, Family Accounts for flexibility.
• AI initiatives: Launched AI style assistant to help clients articulate Fix requests, and style visualization feature [Vision] for personalized outfit recommendations.
• Deepening client-stylist relationships: Rolled out Stylist Connect for clients to communicate with stylists.
• Assortment strengthening: Leveraging GenAI in private brand design, added over 50 new brands since FY '25 start, including Varley, Favorite Daughter, etc.
• Cost structure: Reduced SG&A spend by $124 million in FY '25, with gross margin at 44.4% in FY '25, highest since FY '21.

In fiscal year 2025, net revenue was $1.27 billion. Fourth quarter net revenue was $311.2 million, with 4.4% adjusted revenue growth. Fix average order value grew 12% year-over-year, marking the eighth consecutive quarter of AOV growth. Both women's and men's lines of business accelerated revenue growth in Q4. Women's saw growth in footwear (over 35%), denim (especially wide leg), skirts, and athleisure. Men's had double-digit Q4 growth with strong demand in footwear, athleisure, and national brands like Travis Matthew, Adidas, etc.

• FY '26 total revenue expected between $1.28 billion and $1.33 billion, adjusted EBITDA between $30 million and $45 million, free cash flow positive.
• Q1 '26 total revenue expected between $333 million and $338 million, adjusted EBITDA between $8 million and $11 million.
• Project FY '26 gross margin between 43% and 44%, full year advertising cost between 9% and 10% of revenue.
• Plan to shift more compensation mix from equity to cash, positively impacting net income.

Q: Where are you seeing the most growth from in terms of additional brands and top line, and how are tariffs impacting AOV?

A: Both women's and men's business accelerated revenue growth in Q4 due to expansion into non-apparel categories and infusion of established brands. Women's saw growth in footwear, denim, skirts, athleisure; men's had double-digit growth in Q4 with strong demand in footwear, athleisure, and national brands. None of the AOV growth in Q4 was attributable to tariffs due to work by the tariff task force to mitigate impacts.

Q: Where do you see taking market share from and planning for holiday?

A: Taking share from retailers that don't deliver personalization. For holiday, leaned in more meaningfully last year and plan to build on it. Benefits from flexibility in experience (themed Fixes, larger Fixes, family accounts), improved assortment, new features like Vision and Stylist Connect, and investments in promotional/CRM capabilities. Active client growth rates improved for 5 consecutive quarters, and new client 90-day LTVs are at 3-year highs.